Ghana’s electricity sector has emerged as the largest pressure point in the country’s state-owned enterprise (SOE) finances, with the Electricity Company of Ghana (ECG) accounting for the overwhelming share of losses recorded by major state enterprises in 2024, according to a new International Monetary Fund (IMF) technical assistance report.
The report presents the problem as more than a question of poorly performing companies.
It identifies a chain of financial, governance and operational weaknesses through which liabilities accumulated by strategic state enterprises can ultimately become a burden on government and, by extension, taxpayers.
Across Ghana’s SOE portfolio, liabilities increased dramatically from GH¢35 billion in 2015 to GH¢282 billion in 2024, equivalent to about 25% of GDP.
At the same time, SOEs generated GH¢133.7 billion in revenue and held approximately GH¢395 billion in assets.
The concentration of risk is particularly important for the energy sector. The IMF estimates that the ten largest SOEs account for about 85% of total sector assets and liabilities, meaning financial problems at a relatively small number of strategic companies can have consequences well beyond their individual balance sheets.
ECG Carries The Largest Financial Burden
ECG stands out as the most significant concern.
The electricity distributor recorded an estimated GH¢8.3 billion loss in 2024 despite reporting GH¢36.1 billion in operating revenue.
The IMF further estimates that the company accumulated approximately GH¢26 billion in losses over the three years to 2024.
The scale of the problem is amplified by ECG’s obligations to suppliers and other creditors. Trade and other payables reached GH¢54.5 billion, representing about 76.8% of its liabilities.
Government support to the power sector also features heavily in the company’s accounts.
About GH¢19.7 billion in government payments to independent power producers and related obligations were recognised as grants in ECG’s financial statements.
The figures point to a structural problem in Ghana’s electricity market: the distributor is not simply struggling to generate profits; it is operating within a system where collection losses, supplier obligations, government interventions and power-purchase commitments interact.
The IMF notes that ECG itself estimates that roughly 40% of electricity entering its network is effectively lost through technical and commercial losses, non-metered consumption and other collection challenges.
Debt Costs Can Erase Operational Gains
The wider SOE picture reinforces the vulnerability.
Although aggregate SOE revenues increased substantially between 2021 and 2024, losses also widened from GH¢1.7 billion to GH¢9.7 billion. Financing costs alone reached approximately GH¢9.4 billion in 2024.
That figure is particularly significant because it was almost six times the GH¢1.57 billion in earnings before interest and tax recorded by the largest SOEs.
The implication for energy companies is straightforward: improving operational performance will not necessarily be enough if accumulated debt, interest obligations and foreign-exchange exposure continue consuming the gains.
For Ghana’s power sector, this creates a difficult cycle. Weak collections and financial losses contribute to arrears; arrears undermine the financial position of utilities and power suppliers; and government intervention then becomes necessary to keep electricity generation and supply functioning.
Governance Weaknesses Add To Energy Risk
The IMF also links the financial challenge to how state enterprises are governed.
While Ghana has established formal institutions and rules for SOE oversight, the Fund says board and chief executive appointments remain highly centralised and politically influenced.
It recommends a stronger merit-based appointment process and a gradual reduction in the number of active politicians and senior public officials serving on SOE boards.
“The board and CEO appointment process remains highly political and centralized in the Presidency.”
International Monetary Fund
The concern is particularly relevant to energy companies because their decisions involve large procurement contracts, power-purchase agreements, infrastructure projects and other commitments that can have financial consequences for decades.
Procurement And Power Contracts Under Scrutiny
The report also raises questions about procurement practices within the electricity sector.
It cites the use of multiple take-or-pay power contracts by ECG, including unsolicited arrangements, and references an Auditor-General finding that ECG acquired US$145 million worth of electricity meters through 50 contracts without adherence to the Public Procurement Act.
Take-or-pay arrangements are particularly consequential in an electricity market because they can require a buyer to pay for contracted capacity regardless of whether the full amount of electricity is ultimately needed.
Where demand projections, generation availability or the financial position of the off-taker change, such contracts can create persistent financial obligations.
That makes procurement discipline an energy-security issue as much as a governance issue.
Unfunded Public Obligations Remain A Blind Spot
One of the IMF’s less visible but potentially important concerns is the treatment of non-commercial obligations imposed on SOEs.
State companies may be required to provide services below commercial cost or undertake social programmes without receiving full compensation from the national budget.
When those obligations are not separately identified and funded, it becomes difficult to determine whether an enterprise is inefficient or whether its losses partly reflect government policy.
For ECG and other energy-sector entities, clearly costing such obligations could therefore provide a more accurate picture of underlying commercial performance.
Energy Infrastructure Carries Long-Term Risk
The fiscal exposure does not end with utility balance sheets.
Ten infrastructure-focused SOEs invested more than GH¢14 billion in physical assets during 2024, while the IMF observed that maintenance expenditure among major infrastructure companies remains below levels generally considered necessary to preserve infrastructure.
This has particular relevance for Ghana’s power infrastructure, where transmission and distribution assets require continuous investment to maintain reliability.
Underinvestment in maintenance can ultimately become more expensive than preventive spending, as deteriorating infrastructure requires major rehabilitation or replacement after failures occur.
The IMF is therefore calling for greater scrutiny of major projects, annual investment and financing plans, independent assurance and stronger disclosure of fiscal risks.
The Bigger Threat Is What Returns To Treasury
The report does not make a blanket case for privatising Ghana’s state enterprises.
Its central prescription is stronger accountability, financial discipline and enforceable performance requirements.
For the energy sector, however, the message is difficult to ignore.
Ghana can improve its central government finances while still leaving a substantial fiscal vulnerability outside the government’s headline balance sheet if strategically important companies continue accumulating losses and liabilities.
ECG is the clearest example. Its financial condition affects not only electricity distribution but also independent power producers, fuel suppliers, banks, government finances and ultimately the reliability and cost of electricity supplied to households and businesses.
The more important test of SOE reform, therefore, is whether Ghana can prevent operational inefficiencies, weak procurement, political interference and unfunded public obligations from repeatedly migrating into public debt.
Until that happens, improvements in the government’s fiscal position could remain exposed to financial pressures building inside the very state enterprises that underpin Ghana’s energy and productive economy.
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